interest rates

landy7800

Hi, i have a vanquis car and im confuse how the interest works.

its 39.9% APR does that mean 39.9% of the balance over the year divided by 12 to get the monthly rate of is it 39.9% per month.:cool:

[Deleted User]

It's a little less than 1/12 per month (due to compounding).

bsms1147

The first one (though the exact figures will be slightly off). The 'A' in APR stands for annual.

YorkshireBoy

The 'A' in APR stands for annual.


But you can't just divide by 12, as that wouldn't allow for any compounding of interest. This is why they also quote a monthly rate.


However, and this is the important bit, you don't pay any interest if you a) only use it for purchases, and b) you pay in full every month. Of course, this being a credit-builder card with VERY HIGH interest charges, that's what you'll be doing isn't it?

grumbler

>> APR converter

landy7800

Thanks guys, to make things more confusing i have £100 in my bank ready for my shopping. Will i be better off paying £100 of my credit card to reduce the balance then in 2 weeks use my credit card to pay for my shopping.

CLAPTON

landy7800 wrote: »

Thanks guys, to make things more confusing i have £100 in my bank ready for my shopping. Will i be better off paying £100 of my credit card to reduce the balance then in 2 weeks use my credit card to pay for my shopping.

well yes, as the interest accrues base on the daily balance


so if you paid 100 in now and didn't spend the 100 on the card for say 2 weeks, then you would say about £1 in interest

landy7800

Thank you your a great help.
Id love to no how your worked that out.
I need a idiot guide how to do the maths.

grumbler

(1+0.399)^(14/365)-1=0.013 =1.3% - this is fortnight interest rate (or just divide the monthly rate by 2 for an approximate figure).

£100*1.3%=£1.30